The UK Facing Crisis Amid Global Credit Crunch, BoE Cuts Interest Rates
For more than a decade, the United Kingdom has been building a name for itself as a world financial hub that rivals New York. But the global credit crunch is making this status more of a liability than an attraction. No other large country is as dependent on the movement of foreign money through its banking system.
In an attempt to shore up the British economy during the global credit squeeze, the Bank of England cut interest rates by a quarter percentage point to 5.25 percent today. but policymakers are clearly concerned that inflation remains a problem.
Some $2.4 trillion flowed in and out of the U.K. in 2006, an amount equivalent to the country's entire annual economic output, the most recent data indicate. The financial sector accounts for more than one-fifth of all U.K. jobs, compared with only 6% of jobs in the U.S., and contributed about one-quarter of the nation's economic growth over the past five years.
Published on February 7, 2008
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